by Omega Ngema | Aug 3, 2022 | Personal Finance
The term “blacklisted” is widely used in financial sector. Loosely, it used to describe someone who has a bad credit score, signifying a high risk to creditors, and certainly, it was used by credit collectors to try and scare consumers into paying off unpaid debt. Let’s get something out of the way. There is no such thing as being blacklisted. It is absolutely untrue that when you experience challenges in paying off your debt on time and in full, your name appears on an actual blacklist of people in a similar predicament.
According to Transunion, blacklisting dates back to an era, over a decade ago, when credit bureaus only kept negative information about consumers. This vocabulary has since left the ambits and it left National Credit Regulator as consumers credit behaviours are measured by so much more than their negative transactions. The credit reporting system nowadays is much more sophisticated. With positive data included in credit reports, there is a greater number of features at play in a person’s credit report, and these collectively inform lenders as they decide on your creditworthiness.
In the age of credit scores, which are informed by both positive and negative credit transactions, determinations of one’s creditworthiness are more comprehensive and lucid. Accordingly, lenders are more likely to grant you credit if you have a high credit score. In contrast, a lower credit score increases the risk of a lender turning down a credit application.
Your payment history is tracked every month, and your score is affected either positively or negatively based on it. When you pay on time, this is positive, but if you pay late (that is after more than 30 days) or default (more than 90 days), this is likely to be negative and creditors are more likely to reject your credit application based on this.
In any case, being turned down on a credit application does not necessarily mean that the consumer has acted badly or that they have been “blacklisted”. In some cases, they may not meet the lender’s credit criteria.
The key point is that, whether life or your life choices throw you wayward the lower end of a credit score and you end up struggling to substantiate your creditworthiness to lenders, landlords, or even prospect employers, it does not have to end there.
Your situation can completely be turned around. Secondly, you may not even need to be in that position in the first place. For instance, you signed up for a clothing account 10 years ago while still in college, which in the first place is reckless lending because you should not have even qualified, anyway somehow you ended up defaulting on this account, and to this day you still get calls from debt collectors threatening you with all sorts of untruths. That debt is prescribed. This means that it has expired, and the creditor may not collect from it anymore. It also means that you can report it to the credit bureau and have it officially removed from your credit report and . Ultimately, even if your-less-than-perfect score cannot be disputed, you can still change it around.
Founder and Debt Counsellor from National Debt Advisors Sebastien Alexanderson said one of the biggest misconceptions that the “blacklisting” myth creates is the idea that once you have had an imperfect credit history you will forever be entrenched in the dark furrows of the “blacklist”. This not only expunges any hope of a healthy financial future, but also dissuades consumers from even attempting to adopt healthier money habits as they are led to believe that they have reached the point of no return.
This is unfortunate because the exact opposite is true. “It is still possible to regain creditworthiness even if you have mishandled your credit in the past. This can be achieved by managing your credit more responsibly in the future, both now and in the future. You may not be able to rewrite history, but there are steps you can take to build a better credit rating,” said Alexanderson.
If you have ever been threatened with blacklisting, contact NDA today, let us help you turn things around.
